Glossary

Explore some of the most common terminology associated with trading forex/CFDs available from Investous.

Account Balance
Your account balance is the total value of all trading capital net of realized gains and losses.

Account Equity
Your account equity is the total value of your account net of unrealized gains and losses.

Asset
Currencies, stocks, bonds, commodities, or any other kind of underlying asset available for CFD trading.

Base Currency
In forex currency pairs like EURUSD, the base currency is the one listed first. In this case, it’s EUR, or euros. The value of the base currency is equal to the value of the pair, which reflects the base currency’s value in relation to the counter currency — in this case USD or US dollars.

Basis
The difference between the price of an asset and the price of its futures contract.

Bearish
Sentiment that the market or asset will decrease in price.

Bid/Ask Spread
The difference between the price of the Bid, or sell price of an asset, and that of its Ask or buying price.

Bullish
Sentiment expecting the market or asset to increase in price.

Buyer
The trader who takes a long position in a financial instrument.

CFDs
CFDs are the abbreviation of Contracts for Difference, which are financial instruments that allow traders to speculate on the value of any kind of asset — commodities, stocks, bonds and more — without owning the underlying asset itself.

Charts
A visual representation of numerical data over time. In finance, charts can illustrate how the price of an asset moves up and down over time.

Commission
The fee that traders pay their broker for executing an order.

Commodities
Any resource taken from the earth or grown naturally upon it and then commoditized — or standardized into divisible, tradeable units. These have intrinsic value for manufacturing and other uses. Popular commodities are oil, livestock, wheat, and gold.

Currency Pair
In forex, a pair of currencies that are being traded for one another. The currency pair is defined by the value of its base currency in relation to its counter, or quote currency.

Cryptocurrencies
Digital tokens created with blockchain technology that store value and can be used to transact with online.

Economic Indicator
A report or announcement from a government or polling entity that indicates something about an economy and financial health. Common economic indicators are reports about unemployment, interest rates, GDP, and other metrics of economic performance.

Expiration
Expiration is when a contract ceases to offer the buyer his or her right to purchase the underlying asset.

Futures
A contract to exchange cash for assets at a specific time in the future, and at a specific price.

GMT
Greenwich Mean Time – a time zone located in outer London that isn’t subject to daylight savings clock changes that is commonly associated with available trading hours

Hedge
A position opened to reduce the risk of another open position, usually in the opposite direction.

Intrinsic Value
The real, underlying value of an asset, and not necessarily its current price.

Liquidation
The event that a trader’s position is closed out, either by themselves or forcibly, by margin call.

Long
When a trader is long, it means that they’re anticipating the price of an asset to rise, and have opened a position accordingly.

Margin
When a broker loans money to a trader so that they can use leverage, allowing them to control a larger amount of trading capital than what’s currently in their account. Traders typically use it to open positions that are many times larger than what would otherwise be possible, exposing themselves to greater potential for returns but also for losses.

Offset
Opening an equivalent position on the other side of another open trade, so that the asset moving in any direction produces neither a gain nor a loss.

Pending Order
A pending order is a position that has not yet been filled. Whether a limit order or a stop order, the position will only be filled when the financial instrument reaches a certain price and has found a buyer, or buyers.

Quote Currency
In forex currency pairs like USDCNY, the quote currency is the one listed second. In this case, it’s CNY, or Chinese yuan.

Rollover
Process of switching the duration of an open position in a contract that is set to expire by rolling the position over into the next contract period. The rollover may be accompanied by a charge when one of the contracts is closed and losses/gains are realized before the new position is opened.

Seller
The trader who takes a short position in a financial instrument.

Short
Traders who believe that the price of an asset will fall and have opened positions accordingly.

Swap
A swap fee is charged when you keep a position open overnight.

Trend
A trend is a prolonged market state that indicates something about the market itself. Price trends, for example, tells traders how the asset’s price is behaving over a specific period.

Turnover
Turnover is another way of saying trading volume. It is the trading volume for an asset, an individual trader, or an entire market.

Underwater
The state of having an open position that has negative intrinsic value, and once closed, will realize losses for the trader.

Volume
Volume can refer to an individual trader’s account, or the entire market for an asset. It is the total dollar amount of investments into that asset made in the time specified.

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Risk warning: Contracts for difference (‘CFDs’) is a complex financial product, with speculative character, the trading of which involves significant risks of loss of capital. Trading CFDs, which is a marginal product, may result in the loss of your entire balance. Remember that leverage in CFDs can work both to your advantage and disadvantage. CFDs traders do not own, or have any rights to, the underlying assets. Trading CFDs is not appropriate for all investors. Past performance does not constitute a reliable indicator of future results. Future forecasts do not constitute a reliable indicator of future performance. Before deciding to trade, you should carefully consider your investment objectives, level of experience and risk tolerance. You should not deposit more than you are prepared to lose. Please ensure you fully understand the risk associated with the product envisaged and seek independent advice, if necessary. Please read our Risk Disclosure document.

 

Regional Restrictions: IOS INVESTMENTS Limited does not offer services within the European Economic Area and Switzerland as well as in certain other jurisdictions such as the USA, British Columbia, Canada and some other regions.

 

IOS INVESTMENTS Limited does not issue advice, recommendations or opinions in relation to acquiring, holding or disposing of any financial product. IOS INVESTMENTS is not a financial adviser.